22 Feb 2019

Digiday: Retailers Experimenting with Dynamic Pricing Due to Amazon

Digiday: Retailers Experimenting with Dynamic Pricing Due to Amazon

In response to a recent investigative report about Target offering prices on its mobile app that differed depending on whether the customers were inside or outside the retailer’s physical locations, Suman Bhattacharyya of Digiday digs deeper into how the industry’s biggest retailers are experimenting with pricing.

In the article, Ken Ouimet, CEO of Engage3, discussed the evolution of retail pricing and the challenges involved. Everyday Low Price retailers like Walmart and Target are under pressure by Amazon’s pricing algorithms, which can make price changes millions of times per day. As a result, some retailers have resorted to applying similar algorithms to their online and in-app pricing. Although these pricing algorithms work well on an online platform, brick-and-mortar stores are having more trouble implementing it.

“In the 1970s, most retailers had national pricing,“ said Ouimet. “Today, pricing is much more localized; dynamic pricing lets you segment with time, and it’s not only about dynamic pricing but personalized pricing – the price will be different for every buyer, and the discounts will be different.”

Market leaders like Walmart and Target “are competing with Amazon with eyes wide open; they realize it’s a different game – in 15 minutes, a price can be old and it’s usually based on competition,” Ouimet said. “You can’t fight that pricing is becoming more localized, more dynamic, and personalized – in five to 10 years, everything you buy will be based on personalized offers.

Engage3’s mission is to create a retail ecosystem where consumers, retailers and manufacturers all win. They use data science so Consumers are only offered products they want, when they want it, and at a compelling price; Retailers maximize profits by targeting only high-intent consumers; and Manufacturers only invest in discount coupons that have ROI.

Read Digiday’s article here.

15 Feb 2019
Comp Shop Optimization

7 Tips to Optimize Your Competitive Shop Program


Competitive shop programs, also known as competitive price checks, are a retailer’s main method of gaining visibility into their competitors’ pricing. An increase in hard-to-match private labels and the entry of digital e-commerce pricing have introduced higher rates of errors and reduced their effectiveness.

With the right best practices, competitive shop programs can change from being a source of frustration to a source of strategic advantage.

Here are some tips on how to help optimize your competitive shops:


Tip 1: Match your KVI list to your competitors’ products.

More often than not, the data that comes back from a competitive price shop has significant errors. You can’t make good decisions based on bad data, and scenarios like this only puts merchandising and pricing departments at odds with each other. In order to get the right pricing data, you need the right product list.

By matching your KVI list to your competitors’ products first, you save time and effort for both online and in-store data collection. When collection auditors are free to collect prices, they can spend less time looking for products that are unavailable at the competing store. This has two benefits: decreasing the labor costs of the shop and increasing the quality of data.

Tip 2: Do full-books sparingly.

Full books are expensive. The top 10% of products sold typically represent 50% of the total sales dollars. Therefore, full book programs that invest as much in competitive shopping slow-moving items as in fast-moving products are not cost-effective. The problem with full-book shops is that they assign the same value to slow-moving goods and fast-moving goods. As a result, goods that only need to be price-checked yearly are lumped in with goods that change prices weekly–at a premium cost.

Our studies have shown that price change cadence for a lot of items at most retailers are not as frequent as most would think. This knowledge can free up upwards of 50% of budgets to achieve more strategic competitive visibility like assortment changes. You can request a sample price change analysis for a typical retailer here.

Full-book shop costs

On average, we recommend that full-book competitive shops be done between two to four times a year. This can be supplemented by precisely targeted competitive shops.

Tip 3: Match your private labels.

When price-checking a retailer of similar size, it’s advantageous to match your private label products to theirs prior to the competitive shop. By matching private label products and finding equivalents, the collected data becomes much more accurate.

Egg Comparison

For example, if two stores offer private label free-range eggs but one carries a dozen-egg carton and the other an 18-egg carton, it takes more time for an auditor to make this connection and collect the data. By linking the products beforehand, the auditing process is streamlined, and more accurate data comes back to you.

Without product matching, visibility into your competitors is compromised. Private label products offer a greater picture of a retailer’s pricing strategies, and serve as important markers for category trends.


To unlock the last 4 tips, register here.


Combined with other pricing solutions, these tips can stack to make the most out of your competitive shop programs. To learn more about how Engage3 uses artificial intelligence and machine learning for retail solutions, you can register to receive our White Paper here. Frank Scorpiniti, CEO of Earth Fare, also sat down with Engage3 founder Ken Ouimet to discuss the latest industry trends and technology at GroceryShop 2018 — watch the video here.

14 Feb 2019
Falling Prices

Falling Prices Store in Sacramento: A Review

The latest store turning heads in Northern California isn’t known for its purchase-tracking cameras or smart shelf tags—-it’s drawing crowds to its particle board bins. Engage3 visited Falling Prices for a full report on what the discounter has to offer.

Falling Prices, a store based in the Sacramento-area city of Carmichael, serves as a liquidator of Target and Amazon goods. The store is attracting customers through word of mouth and local news coverage, touting a unique pricing model. Though the store is only open 5 days a week, prices fall—as the store name suggests— from $6 to 25 cents throughout the week.

If any goods are left in the store by the end of Saturday, when everything is priced at 25 cents, they are thrown away. Interested shoppers have to balance savings and selection throughout the week before the store is restocked.

First Impressions

When I arrived in the parking lot, the thing I immediately noticed was the sign hanging from the storefront. “Falling Prices” was printed on a white banner held up by four ropes. It was a Thursday, or a $2 day at the store, and there was still a variety of items to search through.

Falling Prices Parking Lot
A full parking lot, largely due to the new Falling Prices store

Outside, one of the windowed walls displayed the price schedule and a list of the product types that the store carried. While standing outside, I noticed a steady stream of customers going in and out of the store, despite it being an ,early afternoon on a weekday.

Falling Prices Sign
An explanation and disclaimer outside of the store, as well as a category list

When I stepped inside, what caught my eye was the furniture in the store. Every piece of furniture, from bins to shelves to the checkout counter, was made from particle board. The shoppers paid no mind to the decor, and instead were busy sifting through the various bins.

The particle board bins were filled to the brim with shelf-stable food products and toys, among other items.  I could see dozens of shoppers wading through the bins, uncovering hidden objects, and placing them in their carts. Here, a four-pack of chocolate almond milk; there, children’s Halloween costumes of every size.

On the far end of the store was a section dedicated to holiday decorations. Wrapping paper, string lights, and home goods made up the bulk of the items here. Immediately next to this area was a bin full of showerhead replacements. Signage was unnecessary, as everyone in the store knew it was $2 Day at Falling Prices.

I continued through the aisles, stopping to search through the bins and pick up odd items. In my cart I carried a collection of bobbleheads, canned sparkling water, a pair of headphones, and a showerhead attachment from an earlier bin.

Showerheads at Falling Prices
Dozens of showerheads, all priced at $2

Despite the appearance of the store, I could feel the excitement of the shoppers around me. The combination of discounted items and a treasure hunt vibe made the store enjoyable to explore.

After taking a few pictures and retracing my steps through the aisles, I was ready to check out. The wait was on the longer side, but this was mainly from the sheer amount of items that customers ahead of me had picked up in the store. Each cart had 20 or more items inside, and I was tempted to go back and pick out a few more items.

I walked away from the store with more than I expected, both in purchases and in opinion. According to a news interview, the owner of the liquidation store is looking to expand to a second location. Bargain hunters may find stores of a similar kind popping up in the area, but competitors will struggle to find a pricing strategy clever enough to outdo Falling Prices.

Local news stations featured Falling Prices during its second week of opening, attracting a larger crowd of shoppers and more items to liquidate. In the video below from the KCRA 3 Facebook page, you can see a larger variety of the products available.

Falling Prices in Carmichael

😱 BARGAIN ALERT: 😱A new store in Carmichael is selling retail items that could otherwise be expensive for $6 and below!Get the details >> https://bit.ly/2sxw7Mm

Posted by KCRA 3 on Wednesday, January 16, 2019

This article is part of the Engage3 Visits series, where we explore concept stores and innovative retail technology. To learn more about our earlier visit to Sam’s Club Now in Dallas, you can read the blog here. For more information on our visit to Amazon 4-Star, the retailer’s customer-curated offering, you can click here.

11 Feb 2019
Winsight Grocery Business

Winsight Grocery Business: Engage3 leads in precision pricing

New visibility illustrates precision pricing on ‘known value items’

In an article detailing the looming tensions in the retail industry, Winsight Grocery Business cites Engage3 as a leader in precision pricing technologies for retailers.

The publication, analyzing the aggressive pricing strategies being put in place by various retailers, points out that there is one common thread in the price war. Winsight writes, “Today, retailers are monitoring prices with exacting precision, right down to the store level.”

This observation was fueled by a blog published by Engage3 co-founder, Tim Ouimet. In the blog cited by Winsight, he clarifies the trend towards dynamic KVIs that are reevaluated much more often than once a year. Technology is playing a larger role in competitive pricing as a result: “The analysis needs to come down to the store level, down to the shopper level, down to the daily level, and have items coming in and out of the KVI list at those lower levels.”

To illustrate the heightening competition in the industry, Winsight references a study published by Engage3 on the “Aldi Effect,” and also notes the growing tension between retailers and the supply chain. The modern retailer faces pressure not only from their competitors, but from suppliers and vendors as well. Tariffs may be a driver behind this pressure.

Pricing battles are becoming the norm, but we may see much more wide-reaching effects from an automated retail industry in the near future. To read the full article by Winsight Grocery Business, you can visit their site here.

05 Feb 2019
Wells Fargo

Engage3 Grows Dramatically, Secures New Investment from Wells Fargo

Additional investment from Wells Fargo Strategic Capital fuels product enhancements, company growth

Engage3 today announced that it has secured additional financing to continue its growth from Wells Fargo Strategic Capital (NYSE: WFC), a division of Wells Fargo Commercial Capital. The company anticipates doubling revenues in 2019, and Engage3 plans to use the funding to expand its staff and scale up the company’s go-to-market initiatives. The company helps retailers balance their price image objectives with their profitability goals through data science, artificial intelligence, and accurate competitive data.

Engage3 was named in the top 1,500 firms for two consecutive years (2017 and 2018) in the Inc. “5000 Fastest Growing Private Companies”in the U.S. It raised its Series B financing two years ago from retail technology-focused venture capitalists and is in the middle of raising its Series C financing.

Engage3 focuses on an integrated retail pricing platform that emphasizes data quality and the management of competitive pricing, which are the foundation of successful price optimization implementations. Engage3’s Competitive Intelligence Platform (CIP) is an integrated end-to-end solution that uses data science to ensure data comprehensiveness, freshness, and accuracy. CIP enables retailers to automate the management and optimize the design of their competitive shop program; uses demand-side product attributes to link “like” competitor products; and reverse-engineers and monitors competitors’ pricing strategies. Engage3’s Competitive Price Response(CPR) is a visual price modeling tool that optimizes pricing, using proprietary psychological models that measure consumers’ perception of retailers’ pricing and predicts the impact of price changes on that image. CPR helps define the consequences of strategic pricing alternatives.

“In a world where 71 percent of consumers say that price determines whether they would shop at your store over another, the use of AI and algorithms to deliver the best price image to shoppers while achieving revenue and profitability goals is the clear answer,” says Ken Ouimet, CEO and founder of Engage3. “Price optimization as a category failed to reach its promise in the ‘90s because of the lack of good quality data as input. Every retailer now understands the importance of having clean, accurate and timely competitive data to formulate the best pricing strategy. We have addressed this problem, and our customers are now reaping the rewards of data-driven, scientific pricing.”

“Engage3’s integrated pricing platform presents great value for retailers in today’s highly competitive environment. We are excited to be an equity investor in this rapidly growing business with a strong platform and founder-led leadership team,” says Puon Penn, the Head of Early Stage Investment Division at Wells Fargo Strategic Capital, who is based in Palo Alto, California.

About Engage3

Engage3 was founded by the creators of KhiMetrics (acquired by SAP), who are credited with creating the retail price optimization space. Engage3’s leadership team is composed of former KhiMetrics, SAP, dunnhumby, KSS Retail, and IBM/DemandTec executives.

Engage3’s focus is on data quality and management which are the foundation of successful price optimization implementations. Engage3’s Competitive Intelligence Platform (CIP) is an integrated end-to-end solution that uses data science to ensure data quality.  Engage3’s Competitive Price Response (CPR) optimizes pricing, and manages a consistent price image across different channels, markets, and categories while providing control over your company’s quarterly sales and profits.

For more information, visit www.engage3.com.


30 Jan 2019

Increasing Profitability While Growing Price Image

Frank Scorpiniti, CEO of health and wellness store, Earth Fare, talks to Ken Ouimet about how they came up with a unique food philosophy of “Live Longer With Earth Fare,” and how they have been able to grow their price image while increasing enterprise profitability using data science.

Below is the transcript of their conversation:

Ken: A couple weeks ago you had me over for your store opening in Fort Mill, South Carolina. A really impressive store, I loved how it was that you just see it right off the road. How are customers perceiving prices in the stores?

Frank: Customers loved it, they love the store experience and we get a lot of feedback about the compelling value that we’re offering the consumer for the cleanest products available. So, they’re pretty impressed with our pricing these days.

Ken: That’s great.

Frank: We have been engaged with Engage3 to help us get better at our pricing for our customers in order to offer them compelling value while at the same time maintaining our margins, and that’s been really important for us, it’s helped advance our business in our customers eyes. In addition to that, we’ve been using artificial intelligence to help us with our weekly promotionals, to bring the best products to our customers at the right time, the right frequency, and the right price.

Ken: You have a marketing campaign, “Live Longer with Earth Fare—Blindfolded.” Very bold statement, can you tell us what that means?

Frank: We were very focused on trying to call out the value proposition of Earth Fare. Why should I shop at a place that has a food philosophy? And early on in the marketing and what we wanted to share our voice with our consumer we were trying to articulate each and every product, why it was beneficial, why it didn’t contain certain items, and that became very noisy. So, after working on it quite a long time, the brand mission of our businesses, it’s really to live a healthier, happier, and longer life. And so “Live Longer with Earth Fare” was born. And we say that you can if you want to be silly and take a risk, you could shop our aisles blindfolded knowing that nothing you ever take home to your family contains artificial chemicals, colors, emulsifiers, any chemical on the boot list. That’s hundreds of chemicals that we don’t allow in our store.

Ken: Do you see any other retailers coming up to those standards?

Frank: Interestingly enough, we are extremely excited because we’re the only ones in North America with this kind of food philosophy. It is very unique and I think it’s what gives us the ability to continue to grow in this voraciously competitive environment. We’re offering the consumer that they’re not able to get anywhere else.

Ken: That’s quite a service to the customer. How do you help them understand what you’re providing them? There’s companies like Kroger, Sprouts, a lot of other stores, Costco, are coming with organic products into this market.

Frank: What’s interesting, a lot of the other grocery retailers do have some of these products that are clean and healthier products, but in those instances you’re having to shop for those products across a minefield of products that are full of chemicals that are bad for you. And so, if the consumer has time to read every label in a store and carefully select without making a mistake.

Ken: And they have a three-year-old in the cart grabbing stuff.

Frank: Right, that’s a lot of time required. And so that’s the benefit is just get in don’t worry about reading labels. Everything in the store is clean and you’re going to find compelling value on every aisle.

Ken: When you think about your price image do you have, sort of, another similar objective with the price image?

Frank: Well, we’re continually trying to maintain and grow our price image to show our consumers compelling value, but some of what’s been exciting here at the show today is it seems that some of the technology now exists to bring together the opportunity, to create one-to-one marketing that is truly customer-centric. In other words, I think our teams could probably work together, Ken, to create offers that are customer-centric where they share into our loyalty database their health and wellness needs and we create unique offers for them. Rather than what oftentimes happens today where four or five or ten different offers are created and then we try to match customers to the offers. You mentioned earlier that 70% of people have some kind of food sensitivity, and probably most of them don’t know that. But the ones that do know what they need to avoid oftentimes know what to avoid but maybe not what to go after to even enhance their health even further. And I think collectively we could probably come to those recommendations and then for that individual give that customer a fantastic one-to-one price offer that we could create.

==end===

Engage3’s Competitive Price Response helps retailers like Earth Fare model and define the impact of strategic pricing alternatives. It is integrated with Engage3’s Competitive Intelligence Platform and could be used with Nielsen market pricing data, if available.

Price Image algorithms are based on Markowitz’s Nobel Prize Winning Efficient Frontier Theory. Watch how this theory is applied to retail pricing in this video.

28 Jan 2019

26 Million Americans May Have Food Allergies: Retailers React

More adults are developing food allergies, and grocers are struggling to keep up with the needs of this food-sensitive group. In a study published by JAMA Network examining 40,443 individuals, researchers concluded that more than one in ten adults are food-allergic. Of those that were allergic, 45.3 percent were allergic to multiple foods, and nearly half reported developing their allergies as adults.

Health-focused grocery stores have long listed potential allergens on shelf labels, and the FDA requires that the “big eight” allergens be listed on packaging. However, as more adults develop allergies, these warnings may not be sufficient. Allergy-aware consumers are eager for clear labelling and warnings, whether they or a family member are the ones with the allergy. Their concerns are valid and urgent, as the number of people hospitalized from allergic reactions to food increased 350% in the last decade.

Show Trumps Tell

In a 2017 paper published in “Allergy, Asthma & Clinical Immunology,” scientists found that consumers preferred the use of symbols over words for allergen warnings. In the same study, people were asked if they were willing to pay extra for allergen information on all food packages. The results were overwhelming: 75% of respondents said they were willing to pay for this, on top of their monthly grocery bill (NCBI).

Shelf Labels with Gluten-Free warning
Gluten-Free shelf labels at a Texas retailer

“In terms of their willingness to pay, the majority of consistent respondents were willing to pay up to $10 extra per month for groceries for the inclusion of allergen labels on food,” reports the study. In other words, consumers are ready and willing to spend more for ease of shopping and peace of mind.

Beyond this, a significant number of survey-takers were willing to pay in the $10-50 range and even over $50. Consumers are willing to pay for the increased cost of food labelling, and may additionally improve their perception of allergy-conscious retailers.

Shelf Labels

Confusing allergen labelling presents an opportunity for retailers to fill the needs of their shoppers. Color-coded shelf labels and warnings make shopping simple for consumers with allergies and dietary restrictions. For this group of customers (which grows larger every year), clear allergen information contributes to their purchasing decisions.

Guide to in-store dietary labels
Shelf labels for dietary restrictions

Customers buying gluten-free products are even more discerning, as gluten doesn’t fall under the Food Allergen Protection Act in the United States. There is an added layer of difficulty when shopping, as food labelling for gluten is lacking compared to other allergens. The FDA only requires the identification of “ingredients that are — or contain any protein derived from — peanuts, tree nuts, shellfish, milk, eggs, wheat, fish or soybeans” (FDA).”

Retailers like PCC Natural Markets, based in Seattle, have taken the initiative ahead of the FDA by labelling gluten-free products with orange shelf tags. The color-coding system makes it easier for consumers with food sensitivities to navigate their aisles.

Current Methods

Whole Foods search filter
Whole Foods product search feature

Whole Foods recently increased their website functionally to account for allergies and dietary restrictions. Online shoppers can filter through products based on gluten-free, keto-friendly, and other attributes. The Amazon-owned grocer is one of the first major retailers to implement a product search system with dietary restrictions in mind, but other food-focused sites have had similar features for years.

In 2014, Pinterest users could start searching for recipes on the website based on their diet and  to exclude certain ingredients. The update made it easier for allergy-conscious home cooks to find recipes, but shopping for allergen-free products was still a cause for concern. Retailers have been comparatively slow to adopt the technology and filter through ingredient lists on a large scale, but health-forward stores like Whole Foods and Earth Fare are warming up to the idea. The Whole Foods website change will likely lead to future app development that allows consumers to search in-store.

What’s Next

Black and White sesame seeds
Black and white sesame, dangerous for those with the ninth most common food allergy

As allergy concerns continue to rise, consumers will be turning to retailers to help keep track of what is safe to eat and what is not. The increased number of sesame allergies is already affecting the market–the FDA is considering adding sesame, the ninth most common food allergy, to the list of necessary ingredient warnings. In the meantime, retailers have the ability to label these “fringe” allergies on shelves and websites. For the consumer with a sesame allergy, this means having a much safer shopping experience.

Frank Scorpiniti, CEO of Earth Fare, recently talked with Ken Ouimet of Engage3 on food allergies as well as many other topics. In addition to product searching, the two CEOs envision a store with full app integration to help consumers navigate aisles and avoid specific ingredients. To learn more about the future of app integration in retail, you can watch the video here.

26 Jan 2019

Nuro: Kroger’s Self-Driving Delivery Ace

Self-driving vehicles are set to transport more groceries than passengers, if Kroger continues its efforts. With the deployment of automated delivery cars in Scottsdale, Arizona, Kroger is taking steps to make grocery delivery easier than ever. The self-driving R1 vehicles, built by Nuro and working to bring Fry’s Food & Drug products to customers in the trial area, are indicative of a growing trend towards convenient grocery tech.

Fry's Groceries inside a Nuro R1
Fry’s and Nuro partnership

However, most consumers aren’t ready to take the leap of trusting self-driving cars, at least as passengers. In a recent survey by the Brookings Institution, only 21% of the thousands of respondents said they were willing to ride in a self-driving car. Much of the hesitation comes from moral concerns and how the vehicles should react in car crashes, but the technology is still appealing.

Self-Driving Versatility

Cooler-sized Amazon Scout
Amazon Scout robot

By bringing self-driving cars into the grocery space, tech companies can test and demonstrate the vehicles with minimal safety concerns. Consumers also have a chance to interact with this tech on a regular basis and grow to trust the delivery vans. Companies besides Kroger have started to integrate automated vehicles into their supply chain as well, most notably Amazon. The retailer recently deployed delivery via cooler-sized robots in a Seattle neighborhood. According to Amazon, though the carts require human supervision for the first stages of testing, they will eventually be able to deliver items on their own.

Still, the R1 cars in Scottsdale are the most advanced grocery delivery vehicles in use, and it’s easy to see why. Nuro, a company founded by former principal engineers at Google, has gathered an impressive team from tech giants and universities around the world. From the Nuro safety guide, we see a glimpse of the future to come: “Our custom vehicle is engineered to make delivery of everything more accessible — from groceries to pet food, prescription drugs to dry cleaning.” By partnering with a team on the cutting edge of self-driving technology, Kroger has set themselves up to be a leader not only in the grocery industry, but in automation as well.

The Nuro Ecosystem

The electric vans travel at a maximum speed of 25 mph and were originally accompanied by human drivers. The supervising employees traveled behind the Nuro R1s in their own vehicles as a way of monitoring the new technology. Since launch, the company has taken steps toward making the delivery fully autonomous.

What differentiates this kind of delivery from the competition is that the customers in Scottsdale can schedule the Nuro vans for same-day delivery, done through the Kroger app. Once a van arrives at a shopper’s home, they unlock a locker compartment on the vehicle with an in-app code. The speed and ease of delivery sets Kroger up to compete with heavy hitters like Amazon and Instacart, even if the range of the electric vehicles is limited.

The added consumer appeal of having groceries delivered via self-driving car is worth noting, as well. Nuro’s R1 fleet is fully electric, and the company frames their self-driving cars as an environmentally-friendly solution to errands. Their focus is on fewer emissions, safer deliveries, and less traffic congestion. It’s unclear how soon Kroger plans to expand their service with Nuro, but the technology is drawing interest from all over the retail industry.

Opportunities

Though consumers are slow to trust self-driving vehicles, Nuro’s R1 vans and similar delivery services may be able to win them over. The R1 is designed to be self-sacrificing and prioritize human safety on the road. Delivery vehicles are free from the ethical debates that have accompanied self-driving technology in the past.

Kroger has aggressively expanded their services in the past months, starting with their acquisition of U.K.-based Ocado. In November, the retailer announced plans to build an automated warehouse in Cincinnati. In combination with the Nuro’s vehicles, as well as a pilot to pick up Kroger groceries at Walgreens stores, the retailer is building an impressive infrastructure to compete with Amazon.

We recently attended GroceryShop and were able to see future developments in the retail industry. To learn more about retail tech innovations, watch this video of Tim Ouimet discussing the rise of agent-based shopping.

23 Jan 2019

Engage3 Joins Nielsen’s Connected Partner Program

Engagement Creates the Industry’s Most Comprehensive Pricing Intelligence Platform

Engage3 today announced their inclusion in to Nielsen’s Connected Partner Program. Through this engagement, data assets from both companies will have the opportunity to combine, creating an integrated competitor price monitoring and execution platform. The combination of Engage3’s Competitive Intelligence Platform and Nielsen’s rich retail measurement data gives retailers and brands the ability to identify, quantify, and prioritize specific competitor activity and how to best react.

“Engage3 and Nielsen both bring unique data assets about competitive pricing activity that provide insights into the marketplace landscape for a retailer,” said Ken Ouimet, CEO of Engage3. “By combining these assets, a retailer will better understand not only their competitors’ activities, but also the financial relevance of competitive price investments and differentiated assortments. They can then decide on what their best countermoves should be.”

Engage3 helps companies compete more intelligently in dynamic and hyper localized markets with store-specific competitive pricing and assortment insights. Engage3’s omni-channel Competitive Intelligence Platform (CIP) is an integrated end-to-end solution that uses data science to ensure data quality. CIP 1) enables retailers to automate the management and optimize the design of their competitive shop program, 2) uses demand-side product attributes to link “Like” competitor products, 3) reverse-engineers and monitors competitors’ pricing strategies, and 4) visually displays these insights via web-based reporting that is integrated with Nielsen’s own reporting portal.

The two companies are already serving several joint customers. “We are excited to bring an even deeper understanding of the competitive landscape to retailers and brands,” said Rob Culin, Senior VP of Personalization and Business Development at Engage3. “As a Nielsen Connected Partner, we can provide the most comprehensive level of visibility and understanding of competitor activity within any given market. We look forward to creating new levels of value for mutual customers we serve.”

About Engage3
Engage3 was founded by the creators of KhiMetrics (acquired by SAP), who are credited with creating the retail price optimization space. Engage3’s leadership team is composed of former KhiMetrics, SAP, dunnhumby, KSS Retail, and IBM/DemandTec executives.

Engage3’s focus is on data quality and management which are the foundation of successful price optimization implementations. Engage3’s Competitive Intelligence Platform is an integrated end-to-end solution that uses data science to ensure data quality. Engage3’s Competitive Price Response (CPR) optimizes pricing, and manages a consistent price image across different channels, markets, and categories while providing control over your company’s quarterly sales and profits.

Engage3 was named in the top 1,500 firms for two years in a row (2017 and 2018) in the Inc. 5000 Fastest Growing Private Companies in the U.S. It also recently raised its Series B financing from retail technology-focused venture capitalists. For more information, visit www.engage3.com.

15 Jan 2019
Price Image

Using Price Image to Formulate Pricing Strategy

Price Image is how shoppers perceive a store’s pricing relative to its competitors. It is not the same as Price Index. Many more things go into establishing price image, including promotion programs, elasticities, seasonality, price ending numbers, and the overall design of a retailer store.

Price Index vs. Price Image

Price optimization solutions that are available today are based on rules and price indices that exclude your desired price image. What is needed are psychological models that measure your consumers’ perception of your pricing AND predict the impact of price changes on that image.

At its core, Price Image takes customer excitement into account. Whereas Price Index relies on historical data and plotting points, Price Image is predictive and non-linear – making it much more useful in making strategic pricing decisions. It incorporates psychological elements, making it a consumer-specific metric.

A Nobel Prize-Winning Approach

The calculation of Price Image was inspired at Engage3 by Markowitz’s Efficient Frontier Theory. It’s a theory  that has been successfully used for decades in managing financial portfolios and is now applied to retail pricing.It enables retailers to strategically manage competitive price adjustments so they can balance their profit goals with a desired price image in the market.

Efficient Frontier

What to Look For in a Strategic Pricing Solution

Price Image takes psychological factors and applies them to pricing data. The resulting models can be used to predict future profitability and are not reliant on historical data. Below is a list of what to look for in a strategic pricing solution:

  • Integration with clean, comprehensive, and accurate competitive intelligence data
  • Statistically-driven performance reporting that separates real pricing impact from market level “noise”
  • Streamlined workflow for competitive price recommendations and approvals
  • Alerts for incomplete or outdated competitive data for review
  • A visual price modeling tool to define the impact of strategic pricing alternatives
  • Competitor activity and movement callouts on highly elastic products
  • Makes price recommendations based on your objectives for:
    • Price image
    • Profitability
  • Allows Merchants and Pricing Teams define their strategy and show the financial tradeoffs for different alternatives

 

The predictive model is especially valuable in forecasting sales, because Price Image allows a retailer to see how its customers are responding to different pricing strategies. Greater visibility translates to higher profit margins and happier customers!

Learn more about how the Efficient Frontier Theory is applied to retail pricing in this video.